Mike Isaac

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China’s Free-Trade Zone Could Be a Small Step in Facebook’s Continued Growth

facebook_ios_appFacebook may have just caught a huge break in its continued quest to go truly global.

Citing anonymous government sources, the South China Morning Post claims that the Chinese government plans to lift an Internet access ban within the Shanghai free-trade zone, potentially giving citizens the ability to visit sites such as Facebook, Twitter and the New York Times for the first time.

If the move is indeed made by officials, it would be a landmark decision, considering the politically sensitive nature of the websites to the Chinese government. Traditionally, the state has kept a tight rein on the types of Internet access its citizens have been allowed, blocking, restricting and often deleting posts from sites across the Web. Both Facebook and Twitter have been blocked in China since 2009.

While the potential lifted ban would only be a first step, it would mark Facebook’s first true entry point into a market of more than 560 million Internet-connected users, according to China’s Web registry regulator CNNIC.

If eventually given access to that mass of people, Facebook could drastically expand its user base, the growth of which has slowed in the recent past, due to its already massive market penetration at more than one billion users.

Facebook and Twitter did not respond to requests for comment early Tuesday morning.

For now, expectations should remain muted. The lifted ban, according to the Post, would initially be confined within the 18-square-mile zone of the free-trade district, which was first established in July of this year. (China has several special economic zones, which free up certain restrictions to allow for eased export and international trade.)

But, if the test goes well, the report said, there is potential over the next few years that the government could expand the lifted ban to the entire Pudong district, an area of about 750 square miles.

Of course, Facebook still has to face an already popular base of social networks rooted inside of China, including Sina Weibo, Tencent’s Weixin, and Renren.com.

Still, analysts were unabashedly positive at the news; Citi analyst Mark May upgraded Facebook’s rating to a “Buy” on Tuesday morning, with a price target of $55, while Stern Agee’s Arvind Bhatia maintained his “Buy” rating with a price target of $50.

Shares of Facebook hit record highs on Tuesday morning on the news, trading at $49.66 per share.


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